Retirement Planning Strategies for Attorneys
One of the best decisions you can make is to prepare for the life you want after retirement. Lawyer retirement plans can be as grandiose or as simple as you want them to be. If you want to stay in control of your lifestyle, then all it takes is a little bit of planning.
Retirement Planning Tips
When it comes to lawyer retirement plans, there are a few things you can do to stay in control. These tips will help you make the most of your time now, so you can have a better retirement later.
Speak to an Advisor You Trust
The most important tip of all is to only follow the advice of a financial advisor that you trust. Many people will have ideas and share their stories, but a financial advisor will have the experience and knowledge to put it all into practice.
Save With the Future in Mind
As you continue saving and investing your money, keep the future in mind. It’s just like running - you race with the finish line flashing before your eyes, which propels you closer toward it.
It’s really easy to get distracted and even disheartened when you are looking around or reflecting on the past. Just keep working toward your goals and you will eventually reach them.
Think About Taxes
Taxes are another thing to keep in mind when you choose savings and investment accounts. Some types of accounts are taxed when you make the withdrawals, others are taxed when you make the deposits.
Speak with a financial advisor and ask them which one is the better choice for your situation.
Finally, allow yourself to dream about what you want your life to look like after retirement. These visions will motivate you to make smarter financial decisions.
It will also help your financial advisor to suggest options that will help you reach those goals.
7 Best Retirement Planning Strategies
These are the seven best lawyer retirement plans you can make. All of these strategies are important because they will help you create the life of your dreams.
1. Pay Off Debt
First, go through all of your debts and make sure that they are working for you, not against you. For example, the mortgage on an apartment building that provides you residual income is actually contributing to your wealth. The finance charges on a credit card are not.
When you retire with fewer debts, the total amount you pay in monthly bills will decrease and you’ll have more money to spend how you want to.
2. Set Realistic Deadlines
When you plan for retirement, you need to look at how much time you have before you reach that milestone. This is your time limit and this number will tell you how much risk you can safely handle.
These deadlines will also help you make smarter purchasing decisions today. Will you have time to pay off that debt before you retire? Will that purchase increase your wealth or income? These are decisions that are easier to make when you know your deadlines.
3. Set a Future Budget
When you are trying to decide how much money to save up for retirement, keep inflation in mind.
Then, try to draft a budget. Set aside enough money so you can afford housing, transportation, food, and healthcare.
It might be difficult to imagine how much rent or transportation will cost in the future, so look at your current spending habits and save up enough money to cover them. You should also include the cost of traveling and other activities you want to do after you retire.
4. Contribute to Your 401(k)
A 401(k) is one of the best ways to save up for retirement. No matter how close or far away retirement is, you should try to contribute as much as you can. Adjust your spending habits so you can afford to put even a little bit more toward it.
This fund will pay out beautifully at retirement and you’ll be so glad you put so much into it.
5. Diversify With Roth or Traditional IRA
Another way to plan for retirement is to build up funds in either a Roth IRA or a Traditional IRA. The difference between the two is how they are taxed.
With a Roth IRA, you pay taxes when you deposit the money into the account. Then, you will be able to withdraw funds tax-free.
Traditional IRAs are taxed the opposite way. You will pay taxes on the money you withdraw for retirement. All the money you add to it is not taxed.
It can be difficult to decide which is the better option for your lifestyle. That is why it is so important to speak to a financial advisor that you trust.
6. Make Risky Investment Choices Wisely
When it comes to investment decisions, some riskier ones might pay out higher - but can you afford to take on those risks?
This is why it is so important to assess your risk tolerance. When you diversify your investments, how much of a risk are you willing to take? How much of a loss can you safely absorb without losing your retirement savings?
These are all things to discuss with your financial advisor. They will look at your time frame and suggest a risk tolerance based on your investment goals.
7. Establish a Withdrawal Strategy
Finally, when you create a retirement plan, set up a withdrawal strategy that protects you from paying unnecessary fines or taxes.
Some types of retirement accounts will penalize you for withdrawing your money too early. Understand when that time frame is and stay within those limits so you can keep more of your money.
Speak to a Financial Advisor
There are so many things to keep in mind when it’s time for lawyers to retire. Working directly with advisors that know about financial planning for lawyers will give you sound advice that helps you meet your goals.
This knowledge will empower you to make smart decisions now that will pay off in big ways later. Contact Power Forward Group today to begin.